In re Go

642 B.R. 50

IN RE: Rolando Ramil Jallores GO aka Rolando Ramil J. Go and Cherry Ann Macaisa Tijam aka Cherry A.M. Tijam aka Cherry M. Tijam, Debtors.

Case No. 21-12657-MKN

United States Bankruptcy Court, D. Nevada.

Signed June 29, 2022

Date: January 12, 2022

Christopher Patrick Burke, Las Vegas, NV, Xenophon Peters, Peters & Associates, LLP, Las Vegas, NV, for Debtors.

ORDER ON MOTION FOR CONTEMPT FOR VIOLATION OF THE DISCHARGE INJUNCTION 11 U.S.C. § 524(a)(2)¹

Honorable Mike K. Nakagawa, United States Bankruptcy Judge

On January 12, 2022, the court heard the Motion for Contempt for Violation of the Discharge Injunction 11 U.S.C. § 524(a)(2) ("Contempt Motion"), brought in the above-captioned case.² The appearances of counsel were noted on the record. After arguments were presented, the matter was taken under submission.

BACKGROUND³

On or about February 19, 2020, Rolando Ramil Jallores Go ("Rolando") and Cherry Ann Macaisa Tijam (jointly, "Debtors") purchased a manufactured home ("Residence"). The Residence is situated on real property that the Debtors do not own. To finance the purchase, they borrowed $62,918 from the Lender pursuant to a Consumer Loan Note, Security Agreement and Disclosure Statement ("Secured Note"). See Lender Ex. A. Title to the Residence is held by the Debtors as reflected in the Manufactured Home Title Information obtained from the Nevada Housing Division of the Department of Business and Industry ("Title Information"). See Lender Ex. B.

Under the Secured Note, Debtors are obligated to commence 276 monthly payments on April 1, 2020, in the amount of $530.57. The Secured Note includes a specific section in capitalized, bold type entitled "DELINQUENCY AND DEFAULT ." Among other things, this section provides that a 5% late charge will be applied if any monthly payment is more than 15 days late. The Secured Note identifies five specific events of default as follows:

Borrower will be in default under this Note if: (1) Borrower fails to make any payment when due; (2) Borrower otherwise fails to perform any of Borrower's obligations under this Note or under any mortgage or deed of trust which secures this Note; (3) Borrower dies or becomes legally unable to manage Borrower's affairs; (4) any statement of fact, representation or warranty Borrower makes to Lender in Borrower's application for credit, any other document submitted to Lender or signed by Borrower in connection with this Note, or in any Note document is false, misleading, inaccurate, or incomplete; or (5) Borrower files a petition in bankruptcy, or a party files a petition in bankruptcy against Borrower.

The fifth ground – a default based on the occurrence of an event such as a bankruptcy filing – is known as an "ipso facto" clause. See, e.g., In re Wright, 622 B.R. 779, 794 (Bankr. D. Ore. 2020) ("Although certain Code provisions limit the enforceability of contract clauses that put a party in default for filing for bankruptcy (ipso factor clauses), the Code lacks a general prohibition on their enforceability. In the context of chapter 7 cases affecting collateral not subject to an executory contract or unexpired lease (see § 365(e)(1)), the Code affirmatively states in § 521(d) that it does not affect an ipso facto clause's enforceability...").⁴ The DELINQUENCY AND DEFAULT section also specifically provides as follows:

In the event of Borrower's default, Lender will give Borrower notice of the default and right to cure the default ("Notice of Default"). Borrower is not entitled to a Notice of Default if Borrower abandons or voluntarily surrenders the Manufactured Home, or it other extreme circumstances exist.

The Secured Note further provides:

If Borrower does not cure the default within 30 days after the postmarked date of the Notice of Default, or if a Notice of Default is not required to be sent, Lender may (1) accelerate the maturity date of the debt and require Borrower to pay Lender the entire remaining balance and all other amounts due under the Note, (2) require Borrower to make the Manufactured Home available to the Lender, (3) take legal action against the Borrower, (4) repossess the Manufactured Home, (5) enforce such rights and remedies available to Lender under the Uniform Commercial Code and other applicable law, and (6) foreclose on the real property, if applicable.

(Emphasis added.)

On May 24, 2021, Debtors filed a voluntary Chapter 7 petition to which they attached their Schedules of Assets and Liabilities ("Schedules"), Statement of Financial Affairs ("SOFA") and Statement of Intention for Individual Filing Under Chapter 7 ("Statement of Intention"). Notice of the Chapter 7 proceeding was given to all creditors, including Lender. On property Schedule "A/B," the Residence was listed as property of the bankruptcy estate. On Schedule "C," Debtors claimed the Residence as exempt. On Schedule "D," Lender was listed as a creditor secured by a first mortgage against the Residence. On their Statement of Intention, Debtors listed the Lender as being secured by the Residence and identified their intention to "Retain and pay current." No party in interest objected to the claimed exemptions. No party in interest objected to the Debtors’ discharge or to dischargeability of any particular debt. No party in interest filed a proposed agreement to reaffirm any consumer debt.

On August 24, 2021, Debtors received their Chapter 7 discharge. (ECF No. 23).

On August 26, 2021, a Certificate of Notice was entered attesting that a copy of the Order of Discharge was transmitted to all creditors and parties in interest, including the Lender. (ECF No. 24).

On August 27, 2021, the Chapter 7 case was closed. (ECF No. 25).

On or about September 10, 2021, Lender sent Rolando a "Mortgage Statement" setting a payment due date of 10/1/2021 in the payment amount of $653.25. See Debtor Ex. 2. The Mortgage Statement acknowledged that the Lender has received a customer payment in the same amount on 9/8/2021. The Mortgage Statement also includes an information box entitled "Bankruptcy Message" stating as follows: "Our records indicate that either you are a debtor in bankruptcy or you discharged personal liability for your mortgage loan in bankruptcy. We are sending this statement to you for information and compliances purposes only. It is not an attempt to collect a debt against you. If you want to stop receiving statements, write to us at the General Correspondence address listed on page 2 of this statement."

On or about September 15, 2021, Lender sent the Debtors separate, but identical documents by certified mail. See Debtor Ex. 3. Both are entitled "Non-Monetary Notice of Default." Both notices ("Non-Monetary Notice of Default") recite the events of default stated in the Secured Note, and then specify:

Due to your Bankruptcy filing, you are now in default . [Lender] intends to move forward with replevin/foreclosure action to repossess the collateral.

Immediately thereafter, the Non-Monetary Notice of Default states:

Methods to Cure Default: (1) Send in the full payoff; (2) Voluntarily Vacate; (3) Re-open Bankruptcy & file a Reaffirmation Agreement. (Emphasis added.)

Like its Mortgage Statement, the Lender's Non-Monetary Notice of Default also includes bankruptcy language as follows: "Please be advised further that this letter constitutes neither a demand for payment of the captioned debt nor a notice of personal liability to any recipient hereof who might have received a discharge of such debt in accordance with applicable bankruptcy... This letter is being sent to any such parties merely to comply with applicable state law governing foreclosure of liens pursuant to contractual powers of sale.."⁵

On or about October 11, 2021, Lender sent Rolando another "Mortgage Statement" setting a payment due date of 11/1/2021, in the payment amount of $653.25. See Debtor Ex. 5. The Mortgage Statement acknowledged that the Lender had received a customer payment in the same amount on 10/4/2021. Unlike the prior Mortgage Statement, this one indicated that on 9/14/2021, a payment of $653.25 was reversed, that on 9/17/2021, a late fee of $26.53 was charged, and that on 10/4/2021, another payment of $653.25 was received. The Mortgage Statement also includes an information box entitled "Bankruptcy Message" identical to the prior statement.

On or about October 26, 2021, Lender sent Rolando a letter. See Debtor Ex. 6. The letter states as follows:

This letter is to inform you that 21^st Mortgage Corporation received a payment in the amount of $653.25, on 10/04/2021. Your account is currently in default due to your Bankruptcy filing; therefore, 21^st Mortgage Corporation is unable to accept payments, and, as such, these funds will be returned to you. You received a Non-Monetary Notice of Default on or about 9/21/2021. Per the Notice of Default, you have three (3) options: (1) Voluntarily Vacate; (2) Send in the full payoff [payoff quote]; or (3) Reopen the Bankruptcy & file a Reaffirmation Agreement. This Notice of Default expired 10/16/2021.

Accompanying the letter is another page stating in bold type "**PLEASE TAKE NOTICE**." It then goes on to state, inter alia , as follows:

This is an attempt to collect a debt and any information obtained will be used for that purpose.

Please be advised further that this letter constitutes neither demand for payment of the captioned debt nor a notice of personal liability to any recipient hereof who might have received a discharge of such debt in accordance with applicable bankruptcy laws...

Apparently, included with the October 26, 2021 letter was a check from the Lender dated 10/22/2021, in the amount of $653.25, payable to Rolando.

On or about October 27, 2021, Rolando sent a letter to the Lender. See Debtor Ex. 7. Among other things, Debtors informed the Lender that they did not wish to lose their Residence, that they had not cashed Lender's two checks for the prior loan payments, and that they had consulted a lawyer regarding the situation.⁶

On or...